Item 2. Managements Discussion and Analysis of Financial
Condition and Results of Operations
This quarterly report on Form 10-Q contains forward-looking
statements that involve risks and uncertainties. These statements relate to
future events or our future financial performance. In some cases, you can
identify forward-looking statements by terminology including "could", "may",
"will", "should", "expect", "plan", "anticipate", "believe", "estimate",
"predict", "potential" and the negative of these terms or other comparable
terminology. These statements are only predictions. Actual events or results may
differ materially.
While these forward-looking statements, and any assumptions
upon which they are based, are made in good faith and reflect our current
judgment regarding the direction of our business, actual results will almost
always vary, sometimes materially, from any estimates, predictions, projections,
assumptions or other future performance suggested in this report.
Overview of our Business
Name and Organization
Park Place Energy Corp. is incorporated under the laws of the
State of Nevada, USA. Throughout this Quarterly Report on Form 10-Q, the terms
"Park Place" "we" "us," "the Company", "our" and "our company" refer to Park
Place Energy Corp. and its subsidiaries.
We are an exploration stage company seeking to exploit resource
plays for oil and natural gas in Europe, particularly in Bulgaria. Today, the
operations of our company and its subsidiaries concentrate on gas exploration
and development in the Dobrich region in north eastern Bulgaria. Our goal is to
become a producer of gas in Bulgaria and other countries with high gas prices
and demand but limited supply.
Our sole material oil and gas property is a 100% interest in
the Vranino 1-11 Block located in north east Bulgaria which was awarded to the
Company on October 12, 2010 by the Bulgarian Council of Ministers. The license
is for the exploration and prospecting of oil and natural gas in the Dobroudja
Basin and is for an initial five year period exclusive of possible extensions.
Due to a legal dispute which was recently resolved in our favor, the Companys
work program relating to the Vranino Block was postponed and this permit will
not take effect until later in 2013. The Company is presently negotiating the
formal license permit agreement with the Bulgarian government.
Work program details
In conjunction with the award of the Vranino block, Park Place
is required to undertake a minimum work program on the block including testing
and re-testing of wells, comprehensive 2-D and 3-D seismic, drill and complete
five additional wells within the license area. Our minimum work commitment as
required by the permit broken down by year is as follows:
Year
|
Exploration activity
|
Year 1
|
Re-enter and test the Vranino #1 well, obtain data on
the block and create database, identify existing seismic lines that would
be good candidates for reprocessing, reprocess seismic data.
|
Year 2
|
Design and make initial arrangements for acquisition
of 2-D seismic, Acquisition of new 2-D high resolution seismic; Process
and interpret 2-D seismic; Incorporate data (2-D) into geologic model;
Design and make initial arrangements for new 3-D high resolution seismic
acquisition
|
Year 3
|
Acquisition of new 3-D high resolution seismic;
Process and interpret 3-D seismic; Incorporate data (3-D) into geologic
model.
|
Year 4
|
Design drilling program; Drill and complete first of
five wells; Test and evaluate; Design drilling program for remaining four
wells based on results of evaluation of first well.
|
Year 5
|
Drill and complete remaining four wells; Design
gathering system for five wells; Prepare Summary Report of project
results.
|
Park Place estimates that the remaining expenditures for the
first year work program will be approximately $450,000. Park Place acquired data
on the block in July 2013 in accordance with the work program. We anticipate
spending approximately $650,000 over the next 12 months in office and general
expenses.
Park Place intends to raise additional capital within the next
twelve months to fund its operations.
Our Website
Our website can be found at www.parkplaceenergy.com. Our Annual
Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form
8-K and amendments to those reports filed with or furnished to the U.S.
Securities and Exchange Commission ("SEC"), pursuant to Section 13(a) or 15(d)
of the Securities Exchange Act of 1934 ("Exchange Act"), can be accessed free of
charge by linking directly from our website under the "Investor Relations - SEC
Filings" caption to the SEC's Edgar Database.
Working Capital
Based on our current plan of operations as set forth above, we
estimate that we will require approximately $1,150,000 to pursue our plan of
operations over the next 12 months. As at June 30, 2013, we had cash of $279,734
and a working capital of $96,802.
We anticipate that additional funding will be in the form of
equity financing from the sale of our common stock will be required to complete
our plan of operations. If we do not continue to obtain additional financing
going forward, we will reevaluate our plans.
Results of Operations
The following summary of our results of operations should be
read in conjunction with our financial statements for the quarter ended June 30,
2013 which are included herein.
Revenue
We had oil and gas revenue of $nil for the six months ended
June 30, 2013, compared to $3,391 for the six months ended June 30 , 2012.
Since inception, we have earned oil and gas revenues of
$1,653,688 relating to our successful exploration efforts and incurred depletion
costs of $1,256,066 and production costs of $1,167,045. We have written off
expenditures of $4,304,265 relating to exploration efforts that did not yield
productive results.
Expenses
Our total operating expenses for the six months ending June 30,
2013 total $123,368 compared to $150,554 for the same period in 2012.
Our primary expense categories are described below:
Office and General Expenses
Our office and general expenses decreased to $12,417 for the
six months ended June 30, 2013 from $33,155 for the six months ending June 30,
2012.
Professional Fees
Our professional fees decreased to $35,100 for the six months
ended June 30, 2013 from $53,275 for the six months ending June 30, 2012.
Management and Consulting
Our management and consulting fees decreased to $49,285 for the
six months ending June 30, 2013 from $50,111 for the six months ending June 30,
2012.
Investor Relations Expenses
Our investor relations expense for the six months ending June
30, 2013 increased to $794 compared to $1,720 for the six months ending June 30,
2012.
Loss
Our net loss before other items for the six months ending June
30, 2013 was $123,368 compared to $151,528 for the six months ending June 30,
2012.
Liquidity and Capital Resources
Overview
From May 4, 2006 (date of inception) to June 30, 2013, we
raised net proceeds of $9,386,563 in cash from the issuance of common stock and
share subscriptions received and $858,050 from loans payable less $15,028 for
the repurchase of common stock for a total of $10,229,585 of cash provided by
financing activities for the period.
We used net cash of $55,654 in operating activities for the six
months ended June 30, 2013 compared to $156,616 for the same period in 2012. We
used net cash of $5,285,136 in operating activities for the period from May 4,
2006 (date of inception) to June 30, 2013.
The following table summarizes our liquidity position as at
June 30, 2013:
|
|
As at
|
|
|
|
June 30 , 2013
|
|
|
|
(Unaudited)
|
|
|
|
$
|
|
Cash
|
|
279,734
|
|
Working capital
|
|
96,802
|
|
Total assets
|
|
737,245
|
|
Total liabilities
|
|
192,940
|
|
Shareholders equity
|
|
544,305
|
|
We anticipate that we will require approximately $1,150,000 to
pursue our plan of operations over the next 12 months. As at June 30, 2013, we
had cash of $279,734 and working capital of $96,802. We anticipate raising
additional funds over the next twelve months to pay for our exploration
commitments in Bulgaria.
Cash Flow from Investing Activities
Net cash used in investing activities for the six months ended
June 30, 2013 was $69,453 compared to $124,022 used in investing activities in
the six months ending June 30, 2012.
Cash Provided By Financing Activities
For the six months ended June 30, 2013, cash provided by
financing activities was $379,130 compared to $nil for the six months ended June
30, 2012.
Taxes
The Company is currently analyzing its US tax position for the
years 2007 through 2012 and expects to make appropriate tax filings in the near
future. At the present time, the Company has not determined the amount of taxes,
if any, and/or any penalties that may be due.
Off-Balance Sheet Arrangements
There are no off balance sheet arrangements that have or are
reasonably likely to have a current or future effect on our financial condition,
changes in financial condition, revenues or expenses, results of operations,
liquidity, capital expenditures or capital resources, which individually or in
the aggregate is material to our investors.